Entrepreneurship: 4 Things to Sort Out Before Agreeing to a Business Partnership

It’s exciting to launch a product or service you know will delight or resolve problems for potential customers.

What is more exhilarating, is when your best friend, who has worked side by side researching, testing and enjoying long detailed conversations over breakfast, lunch and dinner has agreed to become business partners with you.

This is great! She’s outgoing, loves marketing and selling while you are good at writing, organizing, customer service and the behind the scenes support.

What if instead of a friend, it’s your spouse or sibling who is going to partner with you in business? What about a family business?

Lots of love, fun and good-will. What could go wrong?

Possibly nothing or everything.

We don’t necessarily think about problems or anticipate difficulty when bursting with entrepreneurial enthusiasm, yet the conventional wisdom dictates that both business and relationship issues are plentiful in any business partnership or family business enterprise.

In this article…

I will discuss 4 things all entrepreneurs who are considering a business partnership need to thoughtfully sort out before taking any further steps.

1—Do you know yourself?

Are you self-aware? This is a time to use that self knowledge and be honest with yourself. Be aware of your senses and acknowledge shifts of energy. For some of us, the body holds our truth. Answer these questions:

Do you have a preference to lead and control or adapt and support in relationships?

Are you someone who brings up issues or tends to avoid issues, especially if there’s a chance for conflict?

What kind of relationship feedback have you received in the past?

What are your strengths?

What have been areas of frustration for others when working with you and you with others?

How do you prefer issues with you be brought up by others?

How do you like to fight or not fight?

How comfortable are you with apologizing?

Do you distance or pursue when angry?

What fears about working together do you have?

Tip: If you or someone you are considering for business partnership are reluctant to entertain these questions, I urge you to reconsider entering any business partnership arrangement. It’s great to be positive, yet, wouldn’t it be better to know more about each other, your specific work/relationship/business preferences, etc., before you commit any money or time?

2—The open, honest and nonjudgmental skills are key to successful business communication.

Communicating effectively includes the ability and willingness to be open, honest and nonjudgmental. These attributes create a safe environment for real time discussions. Effective communication is a must for successful business partnerships.

How willing would you be to share your responses to the questions posed above?

How open can you remain when someone disagrees with you?

Will your value for honesty allow you to share with your partner, for example, that you’ve noticed they have been slow with data entry which is keeping the bookkeeper from doing his work?

Can you suspend your defensive reaction to feedback that you sounded impatient when talking to the vendor?

Nonjudgmental is being able to stay away from judging the person as right or wrong, good or bad. Rather, the focus is on the issue, not the person. It becomes an operational issue that needs attention. Problems are approached from a stance of we have a problem, rather than Sue is the problem because she keeps making errors.

Tip: Have a weekly business meeting to connect and share specifically about the business. Sometimes it’s helpful to schedule it away from the business itself so interruptions are minimal.

3—If you are related, a sibling, spouse, adult child, parent or cousin, consider how family business relationships deal with a layer of special-ness unlike commercial business relationships.

Did you know that in the USA, family businesses employ nearly 64% of the workforce and contribute 57% of the GDP (Gross Domestic Product)? They are also responsible for nearly 78% of new job creation.

The special-ness of a family business manifests in the influence of the founder for generations. While the achievements of the past are celebrated, sometimes there is a loyalty that keeps a business in the past vs. looking at the future.

Another family business special-ness trait is keeping family harmony so Uncle Mike’s lack of attention to cost control isn’t addressed openly as family tends to cut each other more slack, wanting to offer more sensitivity. Families are supposed to be supportive, not competitive. Often needed conversations around business issues are avoided.

Issues of fairness, failure to correct assumptions, failure to communicate effectively or manage conflict can have detrimental effects for generations, with family members not speaking to one another.

Family business mediator, Amanda Bucklow, observed how family members in business together often begin with the phrase, you know, and don’t finish their sentences when speaking to each other. It’s as if, says Ms. Bucklow, the sense of affiliation and desire to agree is so strong they finish each others’ sentences and assume they all share the same thoughts.

Tip: The best thing any family business can do is establish guidelines from the beginning that apply to everyone as well as clearly delineated lines of authority. Determine what role each person has and tasks associated with the role. What types of decisions will be made together and individually. What process will be followed when there is gridlock?

4—Sit down and talk through all the things that could go wrong.

Making your list of everything that could go wrong and talking through everything on that list is important. Do it.

Remember to consider the support you need from your loved ones, your spouse and extended family.

Often, after a frank open discussion of all the things that could go wrong, people will decide not to work together.

Tip: Read The Partnership Book by Dennis Clifford for a candid presentation of the potential risks and benefits of being in a partnership. Look at the partnership agreement examples.

The takeaway is…

Entrepreneurship can lead to business partnerships and family business enterprise opportunities. It is prudent to be self-reflective and discuss relationship preferences, communication skills needed and family business special-ness before making a final decision.

Enter a partnership discussion with an openness that allows you the choice to agree or opt out of a business partnership arrangement based on what you learn about yourself and your potential partners.

It’s the smart thing to do.

I’m interested:What advice do you have for entrepreneurs considering a business partnership?

Love this tip “Tip: Have a weekly business meeting to connect and share specifically about the business. Sometimes it’s helpful to schedule it away from the business itself so interruptions are minimal.”

I’d somehow get a way to develop openness. Even a session just spitting out everything that comes to mind – not that it all needs to be responded to, but to open the channels.

Mary, there are lots of in-depth tips here. The weekly business meeting is crucial, not just in family businesses, but in all workplaces whether they are corporate or small business.
Linked to that is a shared vision, a mission statement if you like that is written down.
Having a plan for resolving difficulties is so important, especially when the topic is difficult. And using non-violent communication.
Even though each person needs to have a clear role, they need to be able to cover one another. Such a meaty topic, Well done

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Mary Franz LCSW, CEC, PCC

I help you deal with the stress and overwhelm from work and home so you can stay focused, use your strengths and make big things happen.
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